The firm set a price target of $119 for the energy company.
The report takes into account political instability in Egypt, while evaluating Apache's shares and adjusts the weighted average cost of capital (WACC) to compensate for the volatility.
"We understand the market concerns surrounding Egypt and the political instability of the region and thus have increased the company's WACC by 150 bps. However, at current levels we estimate Apache receives no value for its Egyptian assets. Excluding Egypt from our model and maintaining an elevated WACC, APA would be worth $83 per share," KLR Group said.
"However, if we unwind the WACC adjustment, APA's valuation without Egypt is $108 per share," KLR Group added.
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Separately, TheStreet Ratings team rates APACHE CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate APACHE CORP (APA) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we find that the growth in the company's net income has been quite unimpressive."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- APA's debt-to-equity ratio is very low at 0.29 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.03, which illustrates the ability to avoid short-term cash problems.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Despite the fact that it has already risen in the past year, there is currently no conclusive evidence that warrants the purchase or sale of this stock.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, APACHE CORP's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 74.0% when compared to the same quarter one year ago, falling from $668.00 million to $174.00 million.
- You can view the full analysis from the report here: APA Ratings Report